EEL News Service – Issue 2017/01 of 20 February 2017

Dear members of the EEL Network,

Our first issue of 2017 looks at a number of new CJEU judgments and two AG Opinions. In an interesting VAT case related to the circular economy, the Court ruled that used parts from end-of-life vehicles are second-hand goods under the VAT Directive. In another judgment, the Court found that certain provisions of a Regulation on the monitoring and reporting of GHG emissions were invalid as they widened the scope of ’emissions’ as defined in the ETS Directive. Although strictly speaking not an environmental case, we included a decision on the compatibility of national prohibitions of amino acids with the General Food Law as it deals with the precautionary principle. We also look at a dismissed Spanish claim that sought the annulment of a fisheries Regulation laying down certain total allowable catch (TAC) limits. In a case related to an Italian Natura 2000 zone, the Court interpreted the notion of ‘small areas at local level’ under the Strategy Environmental Assessment (SEA) Directive.

The General Court ruled in a case on the granting of third party access to certain documents by the European Chemicals Agency (ECHA). The Court found that ECHA had not been wrong to grant access, and the claim made on the basis of the protection of commercial interests was thus rejected.

AG Bobek delivered a notable Opinion in the Folk case. The AG recommended that the Court find national measures precluding the right of owners of fishing rights to initiate a review under the Environmental Liability Directive incompatible with certain provisions of that Directive.

There were also several notable news developments. The Comprehensive Economic Trade Agreement (CETA) between the EU and Canada was approved by the European Parliament at the plenary session in Strasbourg. In plenary, MEPs also backed emissions trading system (ETS) reforms that aim to bring the EU in line with the obligations of the Paris agreement, but failed to tackle some structural weaknesses according to critics. The European Commission also published its first comprehensive Environmental Implementation Review, assessing implementation in all member states.

We would like to thank again the participants and attendees at our conference “Trade and Sustainability: CETA Dissected” (see the conference report), which took place on 26 January 2017 at the Asser Institute.

Best regards,

Wybe Douma and Olivier van Geel

Case Law

EU Court judgments

Member states curtailed in adopting precautionary food measures

CJEU judgment:Case C-282/15Queisser Pharma (19/01/2017)
The CJEU has ruled that national laws banning all amino acids unless a derogation is granted are incompatible with articles 6 and 7 of the General Food Law. It noted that amino acids have not been the object of any specific prohibition or restriction under EU law, and therefore are not covered by Food Supplements Regulation 1925/2006. Moreover, Articles 34 and 36 TFEU concerning quantitative restrictions were not applicable in view of the purely domestic nature of the case.

According to the Court’s reasoning, in order to be compatible with EU law, national food safety laws must comply with the general principles of food law, as laid down in the General Food Law (Regulation 178/2002). In particular, the principles of risk analysis and precaution, as enshrined in Articles 6 and 7, must be respected.

The key factor in the Court’s ruling was Article 7(2), which stipulates that national precautionary measures must be proportionate and no more trade restrictive than required to achieve a high level of health protection. By demanding a prior derogation for all types of amino acids in food supplements, although potential risks only arise for some of these amino acids, and by granting such derogations only for a specific period of time even where the safety of the substance is established, German law in its current form is precluded by EU General Food Law.

Also see: Geert van Calster’s blog post on this case. He stresses that the way in which the EU Food Regulation defines precaution curtails the Member States considerably. “Further ammunition against the often heard, and wrong, accusation that the EU is trigger happy to ban substances and processes in the face of uncertainty.”

GHG monitoring regulation declared partially invalid

CJEU judgment:Case C-460/15Schaefer Kalk (19/01/2017)
The Court found that the second sentence of Article 49(1) of and point 10(B) of Annex IV to Commission Regulation 601/2012 on the monitoring and reporting of GHG emissions are invalid as they widen the concept of ’emissions’ as defined in the EU ETS Directive.

The case concerned the German organisation Schaefer Kalk, which operates an installation for the calcification of lime, a process that falls under the ETS Directive. The referring Court asked whether the relevant provisions of Regulation 601/2012 were invalid as, by including, regardless of whether it is released in the atmosphere, CO2 transferred for production of precipitated calcium carbonate (PCC) in the emissions of a lime combustion installation, they go beyond the definition of emissions in Article 3(b) of the EU ETS Directive.

The Court clarified that, as follows from the text of Article 3(b), for there to be an emission within the meaning of the EU ETS Directive, a GHG must be released into the atmosphere. Since the CO2 produced by Schaefer Kalk’s installation is transferred to an installation for the production of PCC, it is not always released into the atmosphere and therefore is not an emission under Article 3(b). The relevant provisions thus unlawfully expanded the definition of emissions, and conflict with the EU ETS Directive.

Used motor vehicle parts are “second-hand goods” under VAT Directive

CJEU judgment:Case C-471/15Sjelle Autogenbrug (18/01/2017)
The Court of justice ruled that used parts from end-of-life vehicles constitute ‘second-hand goods’ under Article 311(1)(1) of VAT Directive 2006/112/EC and are thus subject to the profit margin scheme.

The case concerned Sjelle Autogenbrug, a Danish vehicle reuse undertaking that trades in motor vehicle parts from end-of-life vehicles. The referring court wanted to know whether Sjelle Autogenbrug, which was declaring VAT under the general rules, was eligible for the special VAT arrangements applicable to second-hand goods.

The Court looked at Article 311(1)(1) of the VAT Directive, which defines second-hand goods as ‘movable tangible property that is suitable for further use as it is or after repair’, stating that there was nothing to suggest that this provision excluded goods that had been incorporated as a component of other property. In line with AG Bot’s Opinion, the Court found that the key factor was that the used property had maintained the functionalities it possessed as new, and could therefore be reused after repair, which is the case for the discussed motor vehicle parts.

The CJEU also pointed out that such a conclusion is consistent with the fundamental principle that motor vehicle waste should be reused and recovered, as laid down in recital 5 of Directive 2000/53 on end-of-life vehicles.

For more information on the AG Opinion in this case see Geert van Calster’s interesting blog post.

ECHA correctly granted third party access to documents

General Court judgment:Case T-189/14Deza v ECHA (13/01/2017)
The General Court dismissed an action against three decisions by the European Chemicals Agency (ECHA), which opted to grant access to documents relating to the authorisation of the substance bis(2-ethylhexyl)phthalate (DEHP). DEZA claimed that the decisions were incompatible with the protection of commercial interests exception in Article 4(2) of access to information Regulation 1049/2001 read in conjunction with Article 118 of REACH Regulation 1907/2006. Additionally, the applicant argued that the decisions violated the TRIPS Agreement and the European Convention on Human Rights, as well as the decision-making process exception in Article 4(3) of Regulation 1049/2001.

CJEU judgment:Case C-128/15Spain v Council (11/01/2017)
The Court of Justice has dismissed a Spanish action seeking the annulment of Council Regulation No 1367/2014 fixing for 2015 and 2015 the fishing opportunities for Union fishing vessels for certain deep-sea fish stocks. The Spanish state claimed that the Council had exceeded the bounds of its discretion and violated the principle of relative stability of fishing activities, and violated the principle of proportionality, as well as the principle of equal treatment.

In particular the claim concerned the undertaking in Regulation 1367/2014 to, on the basis of scientific advice and discussions in the North East Atlantic Fisheries Commission (NEAFC) establish a Total Allowable Catch (TAC) limit simultaneously covering both the roundnose grenadier and the roughhead grenadier. The differences between these two species are only visible to the naked eye once the head has been removed and the fish is frozen.

It is noteworthy that, regarding the Council allegedly exceeding its bounds of discretion the Court pointed out that, under the Common Fisheries Policy (CFP), it is in fact the Council’s duty to apply a precautionary approach as underlined in Article 2(2) of CFP Regulation 1380/2013. Thus, even in the absence of conclusive scientific evidence, the Council had the power to adopt the measures in question.

Court interprets ‘small areas at local level’ under SEA Directive

CJEU judgment:Case C-444/15Associazione Italia Nostra Onlus (21/12/2016)
The CJEU ruled that Article 3(3) of SEA Directive 2001/42/EC, which exempts plans concerning ‘small areas at local level’ from environmental assessment when they have no significant environmental effects, is not incompatible with the high level of environmental protection under Article 191 TFEU and Article 37 of the Charter of Fundamental Rights. Nonetheless, the Court did confirm that these areas cannot be defined with reference to size only. It was held that, in light of the text of Article 3(3), it is also necessary to establish whether a local authority, as opposed to a regional or national authority, is concerned in the case at hand.

The preliminary questions in this case were raised in proceedings concerning building plans near an Italian Natura 2000 zone that were not subjected to an environmental assessment under the SEA Directive. This assessment was not performed, according to the competent authority, because the plans concerned only small areas at local level covered by the exemption in Article 3(3). Italia Nostra challenged the validity of this provision, pointing out that it allows for plans and programmes that need an environmental assessment pursuant Articles 6 and 7 of the Habitats Directive to not be subjected to mandatory assessment under the SEA Directive.

The Court of Justice rejected this argument, particularly since the discussed exemption does not extend to projects with significant effects on the environment. Additionally, it was found that the fact that national authorities could potentially abuse the provision to circumvent assessment requirements was insufficient to prove its invalidity. Though the Court did confirm the relevance of the type of authority involved, in the case at hand, it is not inconceivable that the measure was adopted at local level in view of the authority (Comune di Venezia) that adopted it, as Advocate-General Kokott pointed out in her Opinion.

AG Opinions

AG delivers opinion in Hungarian polluter-pays principle case

Advocate General Kokott has recommended the Court to rule that EU law, including the polluter-pays principle, does not preclude national laws that impose an appropriate penalty on the owner of a leased plot of land based on the statutory presumption of shared responsibility between the actual user and the owner, if it is in principle possible to rebut this presumption by means of reasonable evidence.

The first preliminary question put before the Court concerns the compatibility of a law imposing penalties for environmental harm with Article 191 TFEU and the Environmental Liability Directive 2004/35/EC. The AG pointed out that, whereas the national court is correct to assume that the polluter-pays principle can only be applied in connection with a specific implementation in secondary law, the Court should look at Waste Framework Directive 2008/98/EC and not the Environmental Liability Directive as the correct source of this implementation.

Relevant according to Kokott are Article 36(2) on penalties in the Waste Framework Directive, the polluter-pays principle in Article 191(2) TFEU, the principle that penalties must be proportionate in Article 49(3) of the Charter of Fundamental Rights (CFREU), and the presumption of innocence in Article 48(1) CFREU.

The second preliminary question, which concerned the concept of more stringent protective provisions, should be answered in the negative, according to the AG. Article 36(2) of the Waste Framework Directive provides that penalties for the breach of waste management law should be proportionate. Thus, the AG claims that ‘more stringent’ penalties based on unreasonable requirements or which impose inappropriate penalties would violate that principle, and that member states cannot use Article 193 TFEU as the basis for imposing such penalties.

AG: owners fishing rights must be able to initiate review over environmental damage

AG Opinion:Case C-529/15Folk (10/01/2017)
Advocate General Bobek recommended that the Court find national measures precluding the right of owners of fishing rights to initiate a review in relation to environmental damage under the Environmental Liability Directive 2004/35 incompatible with Articles 12(1)(a) and 13 of this Directive.

The preliminary questions arose in Austrian proceedings regarding the operation of a hydroelectric power plant that caused fish to be killed. The referring court wanted to know whether a number of Austrian provisions concerning environmental liability could be squared with EU law and if parties who, like the applicant Dr Folk, hold fishing rights, must be granted a right to complain under the Environmental Liability Directive.

In addition to affirming standing in relation to fishing rights, the AG further suggested, making reference to AG Kokott’s Opinion in case C-378/08, that regardless of whether a facility was brought into operation prior to the transposition date specified in Article 19(1), the Directive covers damage caused by continued or repetitive ‘events’ causing damage after that date. Additionally, he argued that legal provisions that generally exempt from the environmental liability regime environmental damage covered by an authorisation granted under national law are incompatible with Article 2(1)(b) of the Directive.

Finally, the AG stated that, in the absence of assessment by the competent authorities under Water Framework Directive 2000/60/EC, Article 2(1)(b) of the Environmental Liability Directive does not require national courts to apply the criteria of Article 4(7) of the Water Framework Directive directly. The AG pointed out that this provision, which is not unconditional, is thus also not directly applicable.

General

European Parliament passes CETA at Strasbourg plenary

European Parliament Press Release:CETA: MEPs back EU-Canada trade agreement
The European Parliament voted in favour of CETA by 408 votes to 254 (33 abstentions) after the approval of the Trade committee in January. CETA could apply provisionally on the first day of the second month following the date both sides notify each other that they have completed all necessary internal procedures, which MEPs expect to be 1 April 2017 at the earliest. Following the EP vote, which marks the completion of the Union’s ratification process, national and regional parliaments in the member states must still ratify the agreement.

European Parliament backs ETS reforms in plenary

European Parliament Press Release:MEPs back plans to cut carbon emission allowances and fund low-carbon innovation
On 15 February, MEPs backed plans to reduce GHG emissions through EU ETS reform, in order to bring EU policy in line with the Paris Agreement by 379 votes to 263 (57 abstentions). Following this approval, MEPs will enter into negotiations with the Maltese Presidency of the Council to reach an agreement on the final shape of the legislation. However, the EP has faced criticism for rejecting a plan to stop free allowances for the cement industry, which is responsible for 5 percent of global CO2 emissions.

European Remanufacturing Council Launched

Euractiv:New remanufacturing trade body launched to advise EU policy
The industry-led European Remanufacturing Council was launched on 27 January. This body is designed to represent the remanufacturing business community, raise awareness, and increase the proportion of remanufactured goods on the EU market from 2 to 5 percent.

EU decision-making in 2016 dominated by trilogue meetings

EUobserver:Secret EU law making takes over Brussels
This EUobserver article voices concerns about the transparency of EU lawmaking, considering that zero bills went to second reading in 2016 for the second time ever (the first time was in 2014). Instead, decision-making occurs behind closed doors in trilogue meetings.

Trump adviser calls climate scientists “urban eco-imperialists”

EUobserver:Climate experts are eco imperialists, says Trump adviser
Climate change denier and head of US President Donald Trump’s Environmental Protection Agency (EPA) transition team Myron Ebell stated “The first point I want to make here is concentrate whenever you hear from an environmental expert, think that he is an urban eco-imperialist,” at an event in Brussels.

Air

Paris uses emissions sticker scheme to ban worst offenders

The Guardian:Paris tries something different in the fight against smog
In response to severe smog, Parisian authorities banned the oldest diesel vehicles from the road. This new tactic was made possible by a sticker scheme which labels cars by their emissions – for instance, electric cars are green, and petrol cars made between 1997 and 2003 are orange.

Polish smog causes 50,000 deaths a year in country of 38 million inhabitants

Euractiv:Smog chokes coal-addicted Poland
An article published on Euractiv paints a bleak picture of the smog problem in Poland which, according to a 2016 European Environment Agency report, causes 50,000 deaths a year. The EU member state’s “addiction to coal” is identified as the cause of this pollution.

Chemicals

Commission registers ‘Ban Glyphosate’ initiative

European Commission Press Release:Commission registers ‘Ban Glyphosate’ European Citizens’ Initiative
The Commission registered a European Citizens Initiative inviting the Commission to propose to Member States a ban on glyphosate, to reform the pesticide approval procedure, and to set mandatory EU-wide reduction targets for pesticide use.

Climate Change

European Parliament’s AFET and ENVI Committees adopt resolution on the Arctic

European Parliament press release:Protect the Arctic from emerging risks, urge MEPs
The Foreign Affairs and Environment Committees of the European Parliament adopted a resolution on protecting the Arctic. Environment Committee co-rapporteur Sirpa Pietikainen made the observation that, while the EU is affected by the changes brought about by melting Arctic ice, it is also one of the greatest emitters to the Arctic atmosphere. The resolution will be voted on in plenary on 2 March 2017.

Chinese envisage leadership role in climate action

The Guardian:China eyes an opportunity to take ownership of climate change fight
Greenpeace East Asia senior climate policy advisor writes that, in view of environmental and economic cost of pollution, China is likely to continue along the line of setting climate action as a key priority, regardless of shifting policy in the US. He refers to Xi Jinping’s recent speech at the UN in Geneva, where he stressed that “all parties should work together to implement the Paris Agreement”.

US could withdraw from Paris Agreement, says Trump aide

Euractiv:US to withdraw from Paris Agreement, says Trump aide
Myron Ebell, who led the EPA transition team, commented on Trump’s campaign promises, noting that “Some of these promises could be delivered right away, and one of these could be withdrawing from the Paris Agreement. I think it could happen any day, but whether it’s today or a sunny day in June, I have no idea.”

MEP Ian Duncan talks ETS reforms

Euractiv:Emissions Trading Scheme by numbers
As you may remember from our last News Service, the EP’s environment committee voted in favour of MEP Ian Duncan’s report on reforming the ETS. In this article, Mr. Duncan elaborates on the process, what was voted on, and what happens next. At the Strasbourg plenary session in February 2017, the EP approved ETS reforms, as is discussed above.

Energy

Second Report on the State of the Energy Union

European Commission Press Release:Europe’s energy transition is well underway
In terms of GHG emissions, renewable energy and energy efficiency, the EU is on track to meet its 2020 targets, according to the Second Report on the State of the Energy Union. Commissioner Šefčovič noted, “Now that a large part of the relevant legislative proposals are on the table, 2017 should be the year of implementation.”

The Energy Union Project: a success?

EUobserver:Energy Union report provides little evidence of progress
The Commission may be overstating the success of the Energy Union Project, or at least it may be too soon to cheer, this EUobserver article suggests. Notably, it is pointed out that the 2020 targets were defined in 2008, before the term Energy Union had been coined. Thus, where one can speak of a European success story, it is questionable whether this success can be attributed to the Energy Union Project, the author claims.

Towards Energy governance that puts efficiency first

Euractiv:How can Energy Union governance help put efficiency first?
Monica Frassoni, president of European Alliance to Save Energy, and Harry Verhaar, head of global public and government affairs at Philips Lighting, comment on energy efficiency in the EU. They argue that a strong energy efficiency Directive supported by a robust governance mechanism are key to ensuring that efficiency is put first in the Union.

Nature & Agriculture

Farmers should give rabbits more space, say MEPs

European Parliament Press Release:Give rabbits more space, urge Agriculture Committee MEPs
The European Parliament’s Agriculture Committee voted in favour of a non-legislative resolution calling for increased action to ensure rabbit welfare. A proposed amendment calling for EU legislation on minimum standards for the protection of farm rabbits was rejected.

China bans ivory, but more action needed to tackle poaching

The Guardian:Alone, China’s ban on ivory could make life worse for elephants
China has banned ivory, forcing all legal ivory carvers and traders to get out of the business by the end of the year. However, if the much larger illegal trade in ivory is not simultaneously tackled, the ban could result in making poaching more lucrative, the Guardian reports.

First FLEGT-licensed wood arrives in the UK

Euractiv:Illegal timber trade set for the chop
The first FLEGT-licensed wood from Indonesia arrived in the UK in January 2017. FLEGT stands for ‘Forest Law Enforcement, Governance and Trade’, and the licensing scheme aims to ensure that timber from Voluntary Partnership Agreement (VPA) countries has been harvested, processed and exported in accordance with national laws. After years of preparation, the first VPA between the EU and a third country, Indonesia, recently entered into force. The forest products from Indonesia consequently are deemed to be legally logged, and the laws on forestry properly enforced in Indonesia.

Review of agricultural data in Europe reveals 20 years of inaction

EUobserver:EU farming policy: The damage done by 20 years of inertia
A long-term review of agricultural data in Europe has revealed that problems already identified in the 1990s have not been resolved, this EUobserver article reports. Part of the criticism focuses on the lack of constructive action to make the Common Agricultural Policy greener.

Transport

Commission is amending ETS to implement ICAO emissions agreement

European Commission Press Release:The EU tackles growing aviation emissions
The Commission is amending the ETS to tackle aviation emissions in order to help implement the ICAO Global Market-Based Measure. The Commission is proposing to continue with the current geographic scope of the EU Emissions Trading System for aviation, covering flights between airports in the European Economic Area.

Waste

European Parliament Press Release:Waste: boost recycling, cut landfilling and curb food waste, say MEPs
The European Parliament’s Environment Committee amended the draft EU ‘waste package’ legislation, arguing that the share of recycled waste should be raised from 44 percent to 70 percent by 2030, use of landfills should be limited to 5 percent, and food waste should be reduced by 50 percent.

Water

Nordic Council set to ban microplastics in cosmetics

Nordic Cooperation:Nordic Council: Ban microplastics in cosmetics
The Nordic Council is drawing up a complete ban on microplastics in cosmetics and skin care products. According to a report performed for the Norwegian Environment Agency, microplastics in cosmetics result in 40 tonnes of microplastics being discharged into the sea in Norway alone.